Nick Buckles, the chief executive of G4S, has expressed his "regret"
after the security group was forced to scrap its £5.2bn acquisition of
cleaning and catering business ISS.

The deal would have turned G4S into the world's second-biggest private employer with 1.2m staff, behind Wal-Mart. However, on Tuesday the G4S board pulled a vote on the acquisition scheduled for Wednesday in the face of fierce shareholder opposition.

G4S will have to pay £50m in fees despite the deal falling apart. Asked whether he will apologise to shareholders, Mr Buckles said: "We clearly regret that we misread the market's appetite for deals of this scale."

Despite the embarrassing collapse of the acquisition, Mr Buckles is set to survive as chief executive after leading shareholders expressed their support. A top five investor said: "The last thing we want is changes to management. They had done well so far."

Mr Buckles added: "One of the things that has been quite powerful is that [shareholders] like the defensive nature of G4S."

The position of chairman Alf Duch-Pedersen is less certain. One of the leading opponents of the deal, hedge fund Parvus, said Mr Duch-Pedersen was the "man responsible for this mess". However, Mr Buckles said the board is "absolutely behind the chairman".

The Telegraph understands G4S was heading for a heavy defeat in the vote. Sources close to G4S say it had been clear "for some time" that the deal would collapse and G4S had been working on a "process of disengagement" with ISS, which included a failed attempt to renegotiate terms.

Shareholders were concerned about the cost of the acquisition, the deeply discounted £2bn rights issue needed to finance it, and G4S veering away from security into lower-margin sectors.

Private equity firms are now thought to be circling ISS. The Danish company's chief executive, Jeff Gravenhorst, said the deal's failure was a "huge surprise" and that ISS is instead likely to pursue a flotation.

G4S needed 75pc of voters to back the acquisition at an extraordinary general meeting. However, a number of investors, including Parvus, Schroders and Artemis, had publicly declared their opposition to the deal before G4S's second-largest shareholder, Harris Associates, confirmed on Monday that it had voted against the acquisition. This prompted a G4S board meeting on Monday night, where it was decided to scrap the deal.

Mr Duch-Pederson said the company still believed in "developing our business towards an enhanced security and integrated facilities services model".